Most people make investments because they want to. They often ignore & overlook whether they actually need to. Investing works very well only if one questions himself on the need. When the need is not clearly identified, the investing is goal-less. Often when we invest without goals, there is a tendency to make decisions without serious reasoning. Most people who bought suburban apartments expecting to benefit from appreciation are now staring at the prospect of selling them off. Why? Because, either the returns are insignificant or losses are staring at them. With returns failing, they see no further need to retain the apartment and incur running and maintenance costs.
If only investors had reasoned out seriously on the actual need before looking at returns, they would have saved themselves a whole lot of trouble. If the need is only to generate returns, financial instruments are far superior investment vehicles. They are easy to acquire, simple to maintain and easily saleable. Here, the need is well defined – one needs financial security, quick liquidity and superior returns. The definition of the need and the clear process employed in making the investment decision will always lead to successful investing. Planning is a natural expansion and a logical approach prevails over the entire investment process. Without a well-defined need, investing mostly takes an impulsive direction and emotions prevail as the dominate decision variable. Decisions happen in haste without due process and this leads to long repentant phases. Surely, one must learn to avoid that if he is to create, grow and safeguard his wealth in a sensible manner.